Australia’s export statistics for 2011 show a change in the pattern of the country’s tallow exports. China remained the major market for tallow, but Singapore went from taking about 35 metric tons of tallow in 2010 to almost 100,000 metric tons in 2011. Volumes to other markets, including China, Pakistan, and South Africa, were all lower in 2011 to accommodate the expansion of sales to Singapore. The total volume of Australian tallow exported in 2011 was 364,000 metric tons.
Exports to Singapore were entirely due to the operations of Neste Oil’s biodiesel plant, reputed to be the world’s largest. The demand from Neste Oil contributed to upward pressure on prices in 2011, particularly in the first two quarters.
Price controls within China dampened Chinese demand from mid-March to mid-August 2011. The resulting price dip in July and August was followed by a price rally from September through December due to the re-emergence of Chinese demand, which was stimulated by the relaxation of price controls resulting in tallow prices out-performing palm stearine. Concerns about tallow shortages combined with the Chinese New Year culminated in tallow prices peaking in December 2011 at levels close to $1,000 per metric ton. However, as 2012 rolled in, the restocking phase of Chinese demand had run its course and was accompanied by increased New Zealand seasonal production, logistical problems, and a cluttered bulk shipping timetable.
At the end of 2011, demand for Australian tallow from Neste Oil was very weak due to several variables. In Germany, tallow was removed from the list of waste materials that could be double counted as a renewable fuel resulting in reduced demand for tallow-based biodiesel. Neste Oil also sourced North American and South American tallow to round out supply and quality issues.
The issues in the Chinese and Neste Oil markets caused a sharp fall in Australian tallow prices in the first quarter of 2012. However, with continuing drought in South America leading to diminishing yields for summer oilseed crops, soybean prices have risen to support the situation that has carried through to strengthen palm oil prices. For example, palm stearine was hovering around $1,000 per metric ton early in 2012, increasing to about $1,140 in April. Chinese buyers who returned to the market for April forward shipment have, in turn, been faced with the elevated price structure.
Australian tallow stocks were not carried forward into 2012 in any substantial volume during the Chinese slow-demand months as the aggregated demand of Taiwan, Korea, Japan, Singapore, and Pakistan was able to absorb production at relatively well-priced levels. In addition, the widespread rain and flooding in southern Australia in early March 2012 disrupted production. Demand from Neste Oil remains an evolving factor, but currently China is the major destination for Australian tallow.
In June, tallow prices in Australia fell sharply following trends in other commodity prices, particularly crude oil and palm stearine. Palm stearine fell by about $150 per metric ton in May and was down another $40 per metric ton in June. Crude oil dropped to less than $90 per barrel in May, further falling to less than $80 per barrel in June. The falling price of crude oil affected the value of tallow for use in renewable fuels, and financial problems in Europe have weakened demand for commodities in general.
At the same time, export demand from China is slow and there has been a loss of sales of premium grades of tallow to China. However, prices are expected to stabilize since there is firm domestic demand for tallow in Australia’s southern states for use in oleochemicals and biodiesel. Production levels in Australia are low and expected to remain so over the winter. New Zealand production will be very slow as well.
Indonesia was the main export market for Australian meat and bone meal in 2011 after being temporarily replaced by China in 2010. Exports to China fell by almost half in 2011 compared to 2010 due to cheaper fish meal, reducing China’s need for meat and bone meal. Taiwan remained a strong market and demand for ovine meal in the United States (US) and Canada picked up after a slower 2010.
Meat and bone meal prices were relatively constant in 2011 moving in the range of $500 to $600 per metric ton depending on whether sales were domestic or export. At the start of 2012, the price of meat and bone meal dropped close to $400 per metric ton even though January prices are usually stable due to short supplies. However, this year, the domestic market was well covered for supplies of vegetable protein, including soy and canola meal, and demand for meat and bone meal was weak. At the same time, export demand was affected by competition from cheaper US product in Indonesia and European Union product in other destinations.
Soybean meal prices have since increased due to dry conditions in South America and prospects of weaker supplies. In the United States, cattle kills are lower than expected and domestic demand for meat and bone meal has increased, pushing up prices by about $100 per metric ton in March 2012. As a result of higher prices and reduced availability from the United States, demand for Australian meat and bone meal in Indonesia has firmed. Domestic demand in Australia has also returned since feed mills have worked through supplies of cheaper soy and canola meals. Domestic users are competing with the export market to secure supplies.
Australian meat and bone meal prices have increased steadily from April to June 2012 after soybean meal prices shot up from about $350 per metric ton in January to $480 per metric ton at the end of June. Meat and bone meal has followed suit in export and domestic markets with demand for Australian product being particularly strong in Indonesia because meal from the United States has been banned since the announcement of a case of bovine spongiform encephalopathy in that country in April.
Domestic demand for meat and bone meal remains steady and with slower production over the winter, prices are expected to stay firm.
The high price of meat and bone meal could reduce usage in least-cost formulations and prices may have reached a ceiling in export markets. But if vegetable protein prices continue to increase, meat and bone meal prices should remain stable. However, the United States is expecting to resume access to Indonesia and if this happens, prices could weaken.
Australian blood meal prices have been falling in 2012 due to the availability of vegetable proteins in the domestic market. However, the low price of blood meal has stimulated export sales and the price of blood meal has started to improve in line with increases in the price of animal protein meals in export markets.
Feather and poultry meal prices followed the same trend as meat and bone meal in the first quarter of 2012. Prices were hit harder than the meat and bone meal price because of avian influenza being identified at two duck farms in Victoria, Australia, leading to the closure of some export markets. Market access for rendered poultry product is now available in Indonesia and the Philippines, but Vietnam remains closed.
The price of Australian feather meal dropped to $400 per metric ton and poultry meal was as low as $650 per metric ton after the avian influenza cases. Prices have since recovered $100 per metric ton. Poultry meal has moved to about $775 per metric ton in response to increased fish meal prices.
August 2012 RENDER | back